Good news but have some perspective, folks

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New Brunswick’s unemployment rate dropped below the national average for the first time since 1976 last month. A combination of 2,400 people leaving the workforce coupled with an increase of 2,900 jobs made for this 1.2 percentage point drop in the unemployment rate.

That’s good news. There is no doubt about it but the unemployment rate only tells one angle. Our employment growth over the past has been well below the national average (2% compared to 3.5%) and since Bernard Lord came to power in 1999, employment growth has been third worst among the 10 provinces in Canada.

I know that McKenna used to talk about record employment growth and Premier Lord used to talk about leading the country in growth and so does Premier Graham. But when the rubber meets the road, we have had some growth (18k call centre jobs for one) but much of what is driving the lowering of the unemployment rate also relates to out-migration and the lack of natural population growth. If New Brunswick had witnessed zero out-migration (the in versus out was zero), our unemployment rate would still be 13% or higher.

Let me give you two numbers. The first is 37,107. That is the natural increase in population since 1991 if we had remained at 1991 birth/death levels. The second number is 23,259. That is the net loss to out-migration since 1991. In other words, if everything else remained constant (immigration, etc.), New Brunswick’s population today would be over 60,000 higher if we had kept our people from leaving for work and if we had maintained our birth/death rates from 1991.

So assuming the same labour force to population ratio, that would add over 33,000 to our workforce.

I know this is back of the napkin calculus but you get the point. The drop in unemployment is due at least as much to out-migration and lack of natural population growth as the fantastic employment growth.

Yes, but not all of those would be unemployed, as there would have been 60,000 more people to house, feed, educate, etc.

Also, the people who outmigrate tend to be the high-skilled people, and they would be filling positions that companies and agencies are fining hard to fill these days.

Given these facts, we cannot conclude that NB’s unemployment would have been higher without the outmigration. Indeed, all things being equal, a better case can be made that it would be lower. Losing motivated and skilled people hurts us more than it helps us.

That’s why I call it back of the napkin. But if we unfold the napkin to give us a little more room, those motivated and skilled people still need jobs. That is why there has been out-migration and why we have not been able to attract migrants or immigrants in any significant way. It is true that if those 60,000 were here you would need to house, feed and educate them. That would provide some economic activity though without jobs I am not sure where the dollars would come from to pay for their public services. Look, my point is not that granular. I am just saying that we have dropped from a 13% unemployment in the height of the last recession to an 8.1% unemployment rate this month despite a less than stellar job creation record. I am saying that the unemployment rate goes down over time as a result of more than just new employment.

I’m no statistician, but I did want to put out a couple of other facets of the picture in response to your blogpost. I can’t speak the the longer term trends but in the past three years we’ve had some pretty strong metrics. Over the last 10 quarters, NB population is up a net ~4600 people. From Sept 2006 through Sept 2009 employment growth is 4.7%, second only to Alberta which sits at 5% for the same period.

I think that is a good point but it probably needs some more analysis. We know that the current government is spending a pile on stimulus this year (construction, et. al.) which is probably pumping up the numbers. There has been some big projects such as the potash mine upgrade and the Lepreau refurbishment and the current Irving refinery upgrade which is currently underway. I think the “second to Alberta” concept is not too important because of the recession. The population growth data is also interesting but someone should study the numbers in greater detail. Again, if we can sustain that growth it would be a big turn in the right direction although 4600 over 10 quarters is only a 0.3% annual growth rate. From 1971 to 1977, the annual population growth rate was almost five times faster at 1.3% per year. We really started to hit a funk around 1997 (0% growth). I would eventually like to see New Brunswick target at least the national growth rate for population and employment (sustained for a decade or more).